It provoked a backlash from unions which raised concerns it was an ‘abuse of public finances’ and feared it could lead to cutting terms and conditions or the reduction in service provision.

The GMB also said it would remove staff from the NHS National Pay Bargaining Agreement, which most of the staff have worked under for 20 years or more.

A business plan was set to go before the trust board later this month.

But the trust’s board of directors has decided against the transfer.

The subsidiary, TEWV Estates and Facilities Management Ltd, was set up in late 2017 to provide estates and facilities management services at Roseberry Park if needed, which happened in June.

Colin Martin, chief executive of Tees, Esk and Wear Valleys NHS Foundation Trust, said: “At that time the Trust also recognised the potential for the company to expand into other areas of estates and facilities management.

“These are important services and the board asked for further work to be undertaken to explore options.

“The decision not to proceed was made following an initial review of a draft business case.

“It was clear to board members that the costs of operating a subsidiary company with the proposed expanded scope would outweigh the potential benefits.

“The business case will therefore not be presented to the board at the end of September as originally planned.”

The union Union has welcomed the decision. Regional secretary Clare Williams said: “This is a fantastic victory for us, and for the dedicated NHS staff who have been tangled up in the issue.